Healthcare Q&A: Recouping those lost healthcare dollars

Healthcare costs account for a lot of dollars for both employees and employers, but there are ways to recoup the costs. finHealth founder and CEO Jim Arnold sat down with HR Exchange Network editor Mason Stevenson to discuss the topic.

Transcript:

Mason

Hi. It’s Mason, the editor of HR Exchange Network doing another live interview here at the CHRO Exchange. With me finHealth founder and CEO Jim Arnold. Jim, thank yo for being with us.

Jim

Hey. Good afternoon. How are you?

Mason

Doing very well. So, this is our second live interview of the day. We're going talk about some healthcare issues and Jim has a lot of great knowledge about that. So, let's just start off with the first question. It's a broad question. Consumers and companies spend a lot of money on

Healthcare. So, can you broadly discuss how that money is spent.

Jim

Absolutely. And it's going to be a little bit different depending upon the company and their demographics, but overall about thirty percent of it goes to hospitals. So, those are hospital-related things: room and board, operating rooms… things like that. Probably about 25 percent are physician encounters. So, whether they're an annual visit or whether they're consult with the radiologist for an orthopedic… that's about 20-25 percent. About 15 percent of surgeries. And then the balance is really, you know, radiology drugs, infusions, non-physician medical services.

Mason

Okay. Can you list… and this was something that I found interesting on your website… can you list the five questions company should ask about healthcare expenditures and kind of explain those a little bit?

Jim

Sure. Sure. I would say the first one is really what metrics are you using to measure healthcare? How do you know your… your process is successful from an accuracy standpoint; from a quality of the providers you're using; from a timeliness; and ultimately from a patient satisfaction. You know, are, you are… your employees who are ultimately your patients and customers, are they happy with the service? That's the first one really around metrics.

Second one is really… are you holding your third party accountable? So, you've essentially taken your healthcare checkbook and you've handed it to somebody else and say ‘Please pay these accurately only for eligible employees, dependents, and spouses. Try not to make any mistakes, but the reality is even if you do, you have access to my bank account and you're going to take that money out at the end of the week. So, some of the other things we look at are, you know, what are the best practices out there? What are the Boeings of the world doing? What is the Mayo Clinic doing? What is Walmart doing? What is GE doing? So, we think that's really important.

Another one really evolves around the wellness aspect. So, what about health assessments and what about fitness trackers? How do they fit into your overall health profile, because your company is sort of a population health issue… and you have different data sources and the claims themselves is just the history. You know, here's what happened in the past with Mason, but what is his profile today? From his assessment, what is… what is his ongoing heart rate, sleep metrics, and things like that? So, those are some really some of the key ones that we see out there.

Mason

Okay. third question: of the money spent, how much of it can be tracked back to spending errors?

Jim

Okay. So, probably the most authoritative source that we've seen on that is really the federal government. So, the federal government audits about 50 to 100 thousand claims a year and they find a net error rate in the 12 to 30 percent rate. Now, interestingly not all of those can be found without actually tracing back to the medical records. So, probably… maybe 2/3 of them you can find them… those are, you know, different types of coverage errors, or duplicate payments, or maybe age or gender conflicts, or just medical codes that are not allowed to be built together… either because they're up coding to a higher level of service or they're just incompatible. So, you can't have a live birth and a caesarean section. There's certain surgeries that overlap or one's a component of another, so there's a lot of guidelines to say you can't bill these two together. So, if you're doing an endoscopy of the shoulder where you're shaving the bone and you're doing an endoscopy of the shoulder where you remove tissue… you can't charge that as two full surgeries because at the end of the day, there's one incision, one anesthesia, and there's massive overlap. These were all designed by the Medicare Administration in conjunction with… with the AMA. And there's other ones that are quantity so maximum… what's called medically unlikely edits… You can't bill me more than a certain number of units usually because it's either dangerous, but whether likely, it's probably a mistake.

Mason

So, HR professionals out there, probably, you know hearing you talk about that… one of the questions they probably have is uh,”what is the most common types of spending errors?”

Jim

Right. Right. Okay, all right. Well one of them… probably basic one is a coverage issue. So, employees with your company, then they leave. So, they still have the medical information on file but they go to Company B. They go to work for them, but the bill is submitted under the old insurance, and unless the proper controls are in place, that will be paid. So, it might be paid thirty days after the fact. Sixty days. And it also depends on the cycle with your third-party administrator as to how frequently you send that data over to them. So, we think of that as coverage or eligibility. There's other type of eligibility issues. Things like… are the dependents really dependents, is the spouse still a spouse? So, some companies will do, you know, different types of eligibility where they’ll request marriage certificates or tax returns or other things. Birth certificates, but you know… they’re only done periodically and sometimes you can find it within the data. So, if you have the data and you can see that employee and the spouse were living in a different address… well, guess what? I think they're divorced or I have a particular employee that has 19 - 19 dependents. You might want to take a look at that. Or the dependents are located in different states with different last names. Well it's not unusual for someone to put their nephew or their niece on a policy. I was talking to a gentleman today and he said they had done an eligibility audit. Took about 5,000 people off their plan, which is substantial.

Mason

Yeah, it has to be. So, once spotted how can those errors be corrected?

Jim

Right. Some of them are easy. So, ideally you want to work with your TPI… your third-party administrator… and that could be could be Aetna, Cigna, Blue Cross, United Healthcare… and you want to flag them as close to the transaction as possible, because the longer you wait… number one, the less likely you'll get the money back and number two: It's more painful for the third party administrator and the provider who received those monies in error. So, what ideally what we want to do is the day it happens, ‘Okay. This is a duplicate payment or this is somebody who's no longer covered or this is a medical coding where you're not allowed to bill it. Now with some of the TPAs, we hope to get it before the money goes out of their account, but in some cases, they pay it out and then then we have to get a credit back. So, but it's all handled. They have regular relationships with those providers.

Mason

Gotcha. So, what other types of data can finHealth gather and analyze for clients?

Jim

Ideally, you know, we start off with the historical date and that's where most of the cost, so healthcare costs are the second largest people cost after salary and probably upwards of thirteen thousand per employee, and so we would just get those records through your third-party administrator. We've only found that about ten percent of the companies we work with actually have the data in-house. Now, that's actually a problem because the company, regardless of who you're using as a third-party administrator, they are not the fiduciary. You're the fiduciary, and ultimately, you can't really exercise your fiduciary responsibility without ever receiving the data. How do you make sure you're in compliance with all those things, so we would say requested it from the third-party administrator and request it as close to the transaction as possible, you know? So, even if you don't use somebody like us… you still want access to it because ultimately you need to make sure your plan is in compliance.

Mason

Question seven. For companies, can you tell me what some of the best practices might be to minimize errors and how to better ensure a control on spending?

Jim

Right. Right. Well definitely first, you know, check with your third-party administrator to say what are you doing, you know, document the procedures. Some folks are really digging in sort from Sarbanes Oxley to say, “okay, well ultimately, it's my checkbook, right? And even though I'm using the third party, I need to sign off that all the key financial controls in place. So, that… that's certainly one. We believe education is probably the biggest component, because there are not just black and white errors. There's that MRI that should only cost $500, but guess what? You just paid $5,000 for it. We had a gentleman who talked to us today, and he had a bill for, I think it was in the neighborhood of $28,000 and he didn't think it was justified. He went and took it to the provider. They gave him a $26,000 discount off his $28,000 bill, because they had overcharged him. So, just the employee awareness and we believe that there's… there certainly education of the employer. You know, get more involved. Get the data. Understand the data, but also have the employee get more involved. So, you're going to be a better consumer of the futures paid $2,000 for something and you realize that it really only should have been $500 and oh, by the way, your provider was a two-star on a rating of one to five you're, going be a little more concerned and you're going raise questions in. Ultimately, that's what needs to happen, because there'll be things on and if you don't ask the questions, you're just going end up paying or your company's going to end up paying.

Mason

Companies want employees to be better consumers. How can companies be better consumers when trying to control healthcare costs?

Jim

I think there's a lot of great solutions out there. Some of them are prepayment, so I think Leapfrog and Cass Life is one of the very popular ones and certainly there's a lot of information there… US News and World Reports, Consumer Reports… we must have found some Medicare sites and consumer ratings. So, the more you understand about the doctor you're going to use and what their cost structure before you make a selection, the better off. But, you kno, the challenges you're going through… it’s a rough time and you have this medical thing you're very worried about it it's really hard to focus on cost and quality, at that time.

Mason

This is, I think, a big question both for customers and for HR professionals… how important is the education part of this? Because there's a lot of information out there, and it's important for folks to understand the realities.

Jim

Right. Right. And one of the key parts of what we do is really to educate them, so not every article on healthcare is of value. So, if I'm in my total rewards role and a lot of things have to do with Medicare, well that doesn't impact me. It's really the corporate things. So, what are… what are those things happening in the marketplace? What's happening to Aetna, you know, Blue Cross? What are the best companies out there doing? So, somebody, like Boeing, is doing some direct contracting. Is that a fit for my company? It might be if I'm in certain geographic areas where I have enough power to really do that or centers of excellence.

So, the concept of a center of excellence is that I can either use my local provider or I can go to the best provider in the country. So, we had the speech today by, I think it was Kathy from Mayo Clinic, so they're definitely considered one of the leading-edge thinkers. Cleveland Clinic is another one. And so some of the large companies will send somebody to a centers of excellence and their choices: you can go to the local provider or you go to the center of excellence, in which case they will be no copay, no deductible, no coinsurance. We will fly you and care giver to this best place and, you know they’ll take care of you. And what we find is, you know, obviously, they're getting the best care. They're not going to be out of work as long. They're going to be very happy. But the most amazing thing is, probably about 25 percent of the time, they will reverse out the local diagnosis. So, my doctor whose only seen three of these cases in the last year thinks it's this. Well, Mayo Clinic treated 400 of them last week. They just know it much better. They know what's available. They know all the latest developments in medicine and so they'll be able to take better care of you there. So, we see that growing.

And it also helps because many companies feel locked in that they only have two hospitals in their geography, but if you can sort of change the dynamics of that so competition isn't just the one in your local city but might be one of these places that are further away… particularly if it's discretionary or something that can be done, you know, on your own timing.

Mason

Okay. So, we'll make this the last question. How do you compile the information about hospitals and procedures… specifically rating an operation cost because that's…

Jim

Right. Right. That’s a great question.

We find there's a lot of big data out there. So, there's a lot of sources. So far… the most reliable one we've seen for hospitals comes from Medicare. So, Medicare is CMS, the Center for Medicare and Medicaid Services. They put out reports on all hospitals. Every hospital has a rating of one to five stars. Only 7% get that five-star rating and it's based on some sub-criteria regarding safety, patient satisfaction, re-admissions for the same cause, hospital-born infections. So, they do a very deep dive and the hospitals are required to report back on all this information. So, for hospitals… that's by far the best one. There's also some really good ones on US News and World Reports. If you have a very complicated surgery, that might be the place to go to find it. Consumer Reports has some. On the provider side, it's a little more difficult, but we have found a site called surgeonratings.org, which is excellent. And so, we've used that on a number of occasions to say “well, gee. This is based on outcomes that that particular physician has generated and, of course, not everyone is willing to participate, but those that do… you get a real comfort level that this person is experienced. They have good outcomes and ultimately, that's going to be a better answer for you than somebody who just does this once a year.

Mason

Well, that's the last question I have. I really appreciate you taking time. I know you've got a lot going on. I've seen you up and down the hallway. It's like a marathon in itself, so I certainly appreciate you taking your time to sit down and answer some of these questions and… you know… regardless of what's happening politically speaking, healthcare is a big deal. And people need to have as much knowledge about it as possible going down the road.

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